2281 · 3.9
Market analysis flashcards
Revision flashcards for Cambridge 2281 Market analysis (syllabus 3.9). Flip, recall, then mark a real past-paper question.
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What is a competitive market?
A market with many sellers of similar products in which no single firm can set the price.
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What is a monopoly?
A market dominated by a single seller protected by barriers to entry, giving it the power to set price.
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What are barriers to entry?
Obstacles that stop new firms entering a market, such as patents, high start-up costs, control of resources and legal protection.
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What is a natural monopoly?
An industry in which one firm can supply the whole market at lower average cost than two or more firms, because of very large fixed costs.
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What are economies of scale?
Falls in average cost as a firm produces on a larger scale.
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What is supernormal profit?
Profit above the minimum needed to keep a firm in the industry, earned when competition is limited.
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What is a price taker?
A firm that must accept the market price because it is one of many sellers of an identical product.
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What is a price maker?
A firm with enough market power to set its own price, such as a monopoly.
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What is competition law?
Laws that prevent mergers creating dominant firms and punish abuses such as price fixing.
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What is a price cap?
A regulated maximum price that a monopoly, usually a natural monopoly, is allowed to charge.